GE Vernova drops 10% after Barclays downgrade hits AI spending outlook

GE Vernova shares tumbled 10% to $1,045.85 after Barclays downgraded rival Siemens Energy, warning that AI infrastructure orders may be peaking.

"The AI-driven equipment cycle has been exceptionally strong, but order volumes will inevitably plateau," Barclays analysts wrote in a note Monday, cutting Siemens Energy to Sell from Hold with a €130 price target.

The selloff extended across the power equipment sector. Siemens Energy dropped 7.7% in European trading, while Caterpillar fell 4.9% and chipmaker ASML declined 5.5%. Nvidia lost 1.2%. GEV had climbed 62% since the start of the year and 100% over the trailing 12 months, pushing its valuation to about 40 times forward earnings.

The decline raises questions about whether the AI infrastructure buildout has further to run. GEV's wind energy segment continues to generate losses, and rising tariff expenses could further compress profit margins. Still, 76% of analysts covering the stock maintain Buy ratings, well above the 55% to 60% typical for S&P 500 constituents.

The selling pressure was compounded by recent insider stock sales. GEV's chief executive officer and other senior executives had been offloading shares after the stock touched a new 52-week high, according to filings. Bearish options activity also picked up, adding to the downward momentum.

The Barclays note struck a sensitive chord across markets. Concerns about whether AI infrastructure investments are approaching saturation levels have weighed on power equipment manufacturers, semiconductor companies, and data center providers throughout the year. Tuesday's action showed how rapidly those worries can cascade: ASML, a key supplier to chipmakers, fell 5.5%, while Caterpillar, another power generation equipment provider, lost 4.9%.

GEV faces additional headwinds beyond the sector rotation. Its wind energy segment continues to generate losses, and escalating tariff expenses could further squeeze profit margins. The company's elevated valuation — roughly 40 times forward earnings — leaves limited margin for error if growth slows.

GEV commands a market capitalization of about $299 billion. Even after Tuesday's retreat, the stock has gained more than 62% since January and roughly 100% over the past 12 months. Wall Street remains broadly bullish: 76% of analysts maintain Buy ratings, significantly above the 55% to 60% typical for S&P 500 constituents.

This article is for informational purposes only and does not constitute investment advice.